Bulldog Resources Inc.

Bulldog Resources Inc.

January 11, 2007 19:35 ET

Bulldog Resources Announces Closing of Acquisition and Expansion of Authorized Bank Line of Credit



Bulldog Resources Inc. is pleased to announce the closing of its previously announced acquisition of oil and gas assets of a privately held company. The properties are producing in excess of 300 Bbls/day of light oil and are located in Bulldog's operating area of Southeast Saskatchewan near our existing properties. This strategic acquisition increases Bulldog's undeveloped land holdings, reserves, production volumes and cash flow. It expands our drilling opportunities with a diversified inventory of prospects on play types Bulldog has enjoyed previous success.


In December, 2005 Bulldog's initial production was 180 Boe/day. Bulldog's 2006 average production volumes are estimated to be 800 Boe/day exceeding our forecast of 770 Boe/day. Bulldog's production after the close of the acquisition is in excess of 1,550 Bbls/day of light oil.


Bulldog's Board of Directors previously approved a first quarter capital expenditure budget of $8.0 million. Seven horizontal wells and one vertical well (3.50 net) are planned for the Fertile property. Five wells (2.68 net) are planned for other areas including the acquisition properties. Our 2007 drilling program has begun with a horizontal well at Fertile.

We will update our 2007 capital expenditure program in the second quarter after we have further evaluated the acquired properties and the results of our expanded exploration program are integrated into our plans.


Due to the evolving nature of our 2007 capital expenditure plans, we previously forecasted Bulldog's initial 2007 average annual production at 1,700 Boe/day. We intend to provide an up-date to this forecast as our operations progress.


Based upon our initial average production forecast of 1,700 Boe/day and a 2007 estimated WTI oil price of US$60/Bbl, we project Bulldog will cash flow $24 million or $0.88 per share basic in 2007.


We have recently increased Bulldog's revolving line of credit to $25 million from the previous authorized level of $7 million. Bulldog has an estimated $4.8 million of net debt as of January 11, 2007 representing approximately 0.2 times our 2007 forecasted cash flow. Our strong cash flows and expanded bank line will position Bulldog to pursue additional expansion activities in 2007.

Bulldog Resources Inc. has 27,459,202 common shares outstanding (29,766,702 common shares outstanding on a fully diluted basis).


We see the current industry environment as a time of increased opportunity to execute our business plan. Lower commodity prices and the royalty trust taxation announcement have reduced the competition for exploration lands and strategic property/corporate acquisitions increasing our ability to expand. Oil field services are easier to obtain at reasonable cost. While current oil prices are down, Bulldog's cash flow per Boe remains extremely attractive with our low operating cost and high netback operations. In addition, the fundamentals supporting increased oil prices in 2007 are strong. Bulldog enters 2007 in an excellent position to continue our growth.

Forward Looking Information

Certain statements included in this press release constitute forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this press release include but are not limited to capital expenditures, business strategy and objectives, net revenue, future production levels, developments plans and the timing thereof, operating and other costs, royalty rates etc. Such forward looking information involves substantial known and unknown risks and uncertainties. Most of these are beyond Bulldog's control and include: the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, and the availability of qualified personnel and services, stock market volatility, and the access to sufficient capital from internal and external sources.

Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Although Bulldog believes that the expectations reflected in such forward-looking statements or information are reasonable, undo reliance should not be placed on forward-looking statements because Bulldog can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Bulldog and described in the forward-looking statements or information.

Finally, in the presentation of the press release Bulldog uses two terms that are universally applied in analyzing corporate performance within the oil and gas industry as explained below.

Cash Flow - This measure is considered critical within our industry both in terms of measuring success in our historical operations and being an indicator of funding sources for on-going efforts to replace production volumes and increase reserve volumes. Canadian generally accepted accounting principles ("GAAP") requires that "funds flow from operating activities" be the measurement focus. This latter term is derived from "cash flow from operations" as defined by Bulldog adjusted for the change in non-cash working capital. Bulldog believes "cash flow " and "cash flow per share" to be more meaningful measures of our performance and therefore have used these terms throughout this press release. Accordingly, Bulldog is required to advise the reader that: (a) these are non-GAAP measures for purposes of Canadian accounting standards; and (b) our determinations may not be comparable to those reported by other companies

Meaning of Boe and Boe/day - When used in this press release, Boe means a barrel of oil equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe/day means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.

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